BILL ANALYSIS C.S.H.B. 1013 By: Romo 04-12-95 Committee Report (Substituted) BACKGROUND In order to reduce costs to the state, several infrequent bond issuers should be placed under the authority of the Texas Public Finance Authority. Centralized bond issuance would represent cost effective debt management that could result in a higher bond rating for the state and save issuance of costs through economies of scale. Centralizing and consolidating bond issuance for these agencies would cut issuance costs such as fees for underwriters, attorneys, financial advisors, rating agencies, printers and payment to registrars and agents. The ability of the Texas Public Finance Authority to issue non-self-supporting bonds is of great financial benefit for the State of Texas. Bonds that are not self-supporting depend solely on the state's general revenue to pay debt service; self-supporting bonds are backed by revenue from projects they finance, and do not put direct pressure on state finances. PURPOSE CSHB 1013 authorizes the Texas Public Finance Authority to issue bonds on the behalf of Texas Department of Commerce, Texas Higher Education Coordinating Board, Texas Agricultural Finance Authority and institutions under Section 17, Article VII, Texas Constitution other than Texas Tech University, Texas Tech University Health Sciences Center, University of Houston System or a component of that system. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 9B, Texas Public Finance Authority Act (Article 601d, Vernon's Texas Civil Statutes) (a) provides for the authorization of the Texas Public Finance Authority to issue bonds for Texas Department of Commerce, Texas Higher Education Coordinating Board, Texas Agricultural Finance Authority and institutions under Section 17 Article VII of the Texas Constitution other than Texas Tech University, Texas Tech University Health Sciences Center, the University of Houston or a component of that system. (b) Removes institutions of higher education authorized to issue bonds under Article VII of the Texas Constitution in addition to Texas Tech University, Texas Tech University Health Sciences Center, the University of Houston or a component of that system. SECTION 2. Amends Article 601d of the Texas Public Finance Authority Act (Vernon's Texas Civil Statutes) by adding Section 9D. Section 9D. PARTICIPATION OF CERTAIN BUSINESSES IN ISSUANCE OF OBLIGATIONS. (a) Identifies (1) "minority group members" the definition of minority group member was amended in the substitute to remove (c) Asian Americans and (d) Mexican Americans or other American of Hispanic origin; (2) Defines "minority owned business." (3) Defines "woman-owned business." (b) Requires that the TPFA make a good faith effort to issue at least 20 percent for the total dollar of obligations to woman-owned and minority-owned businesses. (c) Requires that the authority to submit a report to the governor and the legislature at the end of each fiscal year that includes: (1) the name for each woman-owned and minority-owned business in any issuance that fiscal year; (2) the number of woman-owned and minority-owned businesses submitting bids or proposals in connection with issuance that fiscal year; (3) the amount of obligations issued during that fiscal year and estimated amount of compensation received for participation in the issuance by each woman-owned and minority-owned business. (d) Requires the TPFA to give preference to businesses located in the state if the cost of quality of services being offered or bid is equal to the cost and quality of a business that does not maintain an office in this state. SECTION 3. Amends Subchapter D, Chapter 58, Agricultural Code by adding Section 58.041. Sec. 58.041. BOND ISSUANCE BY TEXAS PUBLIC FINANCE AUTHORITY. Provides that the Texas Public Finance Authority shall issue bonds on behalf of the board of the Texas Agricultural Finance Authority. SECTION 4. Amends Subchapter C, Chapter 61, Education Code by adding Section 61.084. Sec. 61.084. BOND ISSUANCE BY THE TEXAS PUBLIC FINANCE AUTHORITY. (a) Provides that the Texas Public Finance Authority shall exercise the board's authority provided by law to issue bonds and refunding bonds. SECTION 5. Amends Subchapter A, Chapter 481, Government code by adding Section 481.0091. Sec. 481.0091. BOND ISSUANCE BY TEXAS PUBLIC FINANCE AUTHORITY. Provides that the Texas Public Finance Authority shall exercise the department's authority provided by law to issue bonds and refunding bonds. SECTION 6. Emergency Clause. COMPARISON OF ORIGINAL TO SUBSTITUTE The substitute adds Texas Tech University, Texas Tech University Health Sciences Center, the University of Houston or a component of that system to the exclusion of institutions of higher education for whom the TPFA may issue bonds. Also, the definition of "minority group member" is amended to remove Asian Americans and Mexican Americans or other American of Hispanic origin. SUMMARY OF COMMITTEE ACTION The committee considered HB 1013 in a public hearing on March 6, 1995. The Chair offered a complete committee substitute for the bill which was adopted without objection. The following person testified neutrally on the bill: Anne L. Schwartz. The bill was left pending. The committee considered HB 1013 in a public hearing on March 27, 1995. The motion to reconsider the vote by which the committee adopted the committee substitute for the bill prevailed without objection and the substitute was withdrawn. The committee considered a new complete committee substitute for the bill which was adopted without objection. The motion to reconsider the vote by which the committee adopted the complete committee substitute for the bill prevailed without objection. The substitute was before the committee. The committee considered an amendment to the substitute which was adopted without objection. The Chair instructed the Clerk to incorporate the amendment into the substitute. The motion to adopt the committee substitute as amended and report HB 1013 favorably as substituted, with the recommendation that it do pass and be printed, prevailed by the following record vote: 5 Ayes, 0 Nays, 0 PNV, 4 Absent.